level pizza pie to the student protestors that keeps their bellies well-fed and keeps their dreams alive. pizza pulleys. tonight's moment of geek. that does it for us tonight and we'll see you weekend morning at 8:00 eastern. this weekend i welcome dan savidge to talk about guy marriage in washington. it's time for the last word with lawrence o'donnell. have a great night. we don't know what john boehner said to the president on the phone today, but we do know that boehner is finally admitting defeat on one thing. the rich will have to pay more. >> the next 72 hours are critical. >> will republicans cry uncle? both sides are still locked in a stalemate. >> there's plenty of hot rhetoric to go around. >> both sides are coming out swinging. >> raising tax rates will hurt

the economy. >> i will not play that game. >> president obama standing his ground. >> i will not play that game. >> he's not willing to play that game. >> playing the smackdown. >> i think the president has boxed the republicans in. >> i know we have it to raise revenue. >> is he the only republican? >> i don't care how we do it. >> raising tax rates hurt the economy. >> let's just go over the [ bleep ] cliff. >> if they do not make this deal on tax rates for the top 2%, then they're going away. >> i just hope this doesn't >> i will not play that game. >> it goes into february and march. >> public opinion is on their side. >> when we have to raise the debt ceiling. >> i will not play that game. >> this is about gaining maximum leverage. >> we've gone through this before. >> some republicans believe that will give them more leverage. >> it's government at the brink all the time. >> these guys are not serious about negotiating. >> the next 72 hours are critical. >> i think we're going over the cliff. >> let's just go over the [ bleep ] cliff. >> let's go over the cliff. >> at least for a few seconds it

will feel like we're flying. >> with 26 days to go until america goes off the fiscal curb, the house of representatives chose to end their congressional business for the week today to enjoy a long weekend at home, but john boehner stayed behind and spoke by phone this afternoon to president obama. it was their first conversation in a week. also, this afternoon treasury secretary tim geithner said this on cnbc. >> when it comes to raising taxes on the wealthy, those making more than $250,000, if republicans do not agree to that, is the administration prepared to go over the fiscal cliff? >> absolutely. again, there's no prospect to an agreement that doesn't involve the rates going up on the top 2%. >> "the new york times" reports that senior republican ç leadership aides are

contemplating a fall-back position on a fiscal deal. they could foresee taking up and passing legislation this month to extend the tax cuts for the middle class and then resume the bitter fight over spending and taxes as the nation approaches the next hard deadline. it's statutory borrowing limit which could be reached in late january or february. speaking to a business roundtable, president obama responded to that idea this way. >> if congress in any way suggests that they're going to tie negotiations to debt ceiling votes and take us to the brink of default once again, as part of a budget negotiation, which by the way we have never done in our history until we did this it last year, i will not play that game. >> john boehner and house republican leadership met with small business owners today to talk about the fiscal cliff,

raising tax rates on the richest americans for them is still off the table. >> the revenues on the table are coming from, guess who? the rich. there are ways to limit deductions, close loopholes, and have the same people pay more of their money to the federal government without raising tax rates, which we believe will harm our economy. if the president doesn't agree with our proáosal and our outline, i think he's got an obligation to send one to the congress. a plan that can pass both chambers of congress. >> joining me now is former vermont governor howard dean and msnbc's krystal ball. governor dean, our treasury secretary is a very careful speaker. when asked if they're prepared to go off the cliff, his first word was absolutely. there was nothing, nothing could be more clear that this administration means what they

say about getting what they want at this point. >> yeah. the only problem is -- this is a little initially going to team like heresy, the truth is everybody needs to pay more taxes, not just the rich. that's a good start. we won't get out of the problem to raise taxes across the board to go back to what bill clinton had in his taxes. if we don't do that, the problem is pressure is on spending even more. i think we need to make the defense cuts. we want to minimize human services cuts. the best way to do that is go back to clinton era taxes. i actually have mixed feelings about striking a deal where the rich folks pay more taxes. i think they should pay more taxes, but i actually think going off the cliff is a better solution than just charging people who make a lot of money what they were paying when billç clinton was president.

>> the clinton tax rates worked well, and when you look at where we really are today, although the democrats are playing really tough on these top tax rates, they have conceded about 75% of the tax debate to republicans by agreeing with them on all of the other rates. >> that is true, aalthough there is a matter of timing. you know, i think part of what you have to look at here is it's really republicans who force this conversation about having deficit reduction right now. we shouldn't have deficit reduction right now. we should focus on jobs and employment and continued stimulus for the economy, which i was really happy about the president at least had some of that in his plan. then you ask yourself, okay, what could you do in terms of reducing the deficit that would be the least damaging, and what economists say and what makes common sense is people at the top end of the income scale, who can afford to pay a little more, that's the place where we can raise the rates now and not have a major economic impact. so i take the governor's point,

and i agree with it. we probably are going to -- if we're going to continue to make the promises and keep the promises that i think are so important and most progressives do, we probably need to raise taxes on a lot of people. it's a question of timing of when to make those choices. >> the rush limbaugh showed us today how difficult it is for john boehner and eric cantor toç make the moves they've already made. let's listen to what rush said. >> what we got today was a seminar on how to surrender. obama is going to get what he wants. we're using his language. we're now calling new taxes revenues. we have accepted the premise that new revenues will result in greater tax receipts going forward. they must feel so squished, so defeated, so universally disliked.

>> governor dean, they're still far apart, democrats and republicans, but it's worth pointing out how far the democrats have moved since the election it to where they are today. they left that rush limbaugh thinking far behind. >> it's a good thing, because rush limbaugh is nowhere near the mainstream of the american people. i'm also worried about the defense cuts. i think we need to make the cuts. we haven't cut the defense budget much in the last 30 years. they just ordered new uniforms for their chauffeurs for the top brass. you know, this is going to be a lost opportunity if there's too much compromising going on here. i'm going to stick to my position we'd be off going over the cliff, the curb. it's a slope and not a cliff. i take krystal's point as a good point.ç you have to pick your time. the europeans are done too much with austerity.

i think we can afford to do this, and we ought to make the down payment. the cliff doesn't fix the deficit, but it really does make a downpayment and gets defense cuts for the first time. you know damn well the defense won't get cut if they make a deal on this. >> in the "new york post" today a conservative columnist wrote the truth is every way you look at it, the gop is trapped. republican politicians will save and give the president most of of what he wants. the only real question is when. the answer is probably at the worst possible time when they've done even more damage to the party's brand. it seems to me from the perspective he doesn't specify the worst possible time will be after they drive the thing off the cliff. if they're going to do this, they should do it before christmas and go home. >> i think you're right. we've seen tom cole and others starting to say, you know what,

guys? maybe we should go along with the obama plan to extend the rates for the middle class and deal with the rest after the new year. that probably is their best play at this point, because that's such a damaging political point. people understand that republicans are holding the middle class tax cuts hostage in order to fight for tax cuts for this very small percent of the population, and that's ç politically devastating. if you look at the position boehner's in, it's remarkable in a way that he's already admitted that we have to raise revenues on the wealthiest individuals, and that hasn't come without a price. you already see on the right between that and his movements of some committee members assignments that there is a mini rebellion starting on the right. the hash tag fireboehner is taking off. this is something he has to watch. the compromise is not his initial starting position, which is already unacceptable to people like jim demint and others. >> governor dean, if you looked at this from the republican

perspective and you go with what horowitz's presumption they're going to cave on rates at some point and go along with it, would you advise them politically the sooner the better? get this off the doorstep. >> they need to do that. had they not taken such extreme positions mitt romney might have done a lot better. i think the president is in command here. they're not going to beat him on this one. they'll make themselves look bad. i think they do, and if i were them i would do what boehner is talking about. here's the other problem, though. if boehner is not going to get the 60 or 70 tea party people, ç

anything you want to share with us about your future or any other jobs out there? >> i have a bunch of meetings this afternoon, and i look forward to a terrific day. >> that was senator john kerry earlier today with andrea mitchell. not quite willing to discuss his future at this point. the obama administration could announce appointments to his national security team some time

in the next two weeks. according to administration officials and john kerry's name obviously is floated for two positions, secretary of defense and secretary of state. joining john kerry on thshort list to replace leon panetta at the pentagon is former republican senator chuck hagel who met with president obama at the white house this week. as for hillary clinton's position at the state department, the national journal reports that president obama is, quote, genuinely conflicted over whether to pick kerry or united nations ambassador susan rice. president obama said yesterday that republican attacks against susan rice will not influence his decision. ari, what do you make of the chuck hagel situation with his name floating into the mix now? >> i think it's a good faith efforts to take in a wide range of views. we know that president obama in his first term, obviously, went with secretary gates despite his ties to republican foreign policy. hagel is more of a progressive

voice, but i'm not sure that a second-term obama presidency reaches back to another republican defense figure. >> and as to the john kerry/susan rice dilemma that the president faces, he says that the attacks on susan rice won't affect his decision one way or another. it won't force his hand to nominate her, and it won't affect his decision to go with senator kerry, if that's what he chooses to do. is he going to be able to incredibly present his choice as his real first choice under these circumstances? >> well, that's the problem with this town, right? when you have these kind of vicious attacks you are damned if you do and damned if you don't. for cynical operators which i think there are some in the attacks on rice among the republican caucus here, they get a sort of partial short-term victory there because there is a lot of noise.

i think at the end of the day this president gets his first choice, secretary of state nominee through regardless of which one it is. i've heard recently they do lean towards rice. we've talked about that before. it goes to the desperation of the republicans. they're not focusing on anything legitimate regarding the actual foreign policy. they took what happened in libya and turned into a tragedy in search of a scandal, when it is just simply a tragedy. >> ari, another name that came up is anna winter as the possible ambassador to france or the uk. she's the inspiration for "the devil wears prada." how does he handle that one. >> she's an inspiration to so many of us, lawrence.